In the pharmaceutical industry, there is a general need for systems and methods for evaluating the economic and clinical values and potentials of both new and established pharmaceutical compounds and other products. Such evaluations are required to estimate potential sales and suitable pricing levels, as well as to determine appropriate marketing strategies, or even whether to bring a product to a particular market at all.
Conventional marketing models frequently apply basic economic concepts such as supply and demand to make predictions of sales volumes for a product at particular price levels. Such models may take account of the market price for similar products, the size and flexibility of the target market, the effects of advertising spend on price and volume of sales, and relevant characteristics of markets in other countries.
The Price IT (RTM) product available from Inpharmation Ltd., Long Meadow, Spurgrove Lane, Frieth, Henley-on-Thames, England is a computer software package which includes eight different models to predict price-volume curves for pharmaceutical products. The models include: an “Exclusion Model” to determine infeasible combinations of volumes and prices; a “Value in Use Model” using the quality adjusted life year concept; a “Judged Model for Payers” to account for various assessments of price resistance levels; a “User Attraction Model” to combine performance assessments across a range of attributes; a “References Model” to account for clinician thinking with reference to already familiar products; an “International Model” based on per capita pharmaceutical spending and the known price in a reference market; a “Dorfman Steiner Model” allowing for price and advertising elasticity; and a “Judged Model for Doctors” using extrapolation between points representing judgements of demand for the product at various prices. To use each model a number of parameters must be entered, such as estimated demand, price, curve parameters, weights given to various model aspects and so on. The Price IT (RTM) product provides a results tool for combining the price-volume curves from the various models, subject to chosen model weights.
Although the Price IT (RTM) package provides a wide range of models for pharmaceutical pricing assessments, each model is simple and relies on very few input parameters. In real life the factors which combine to effect pharmaceutical value and potential are far more numerous.